Wednesday, June 10, 2015 / by Deborah Argenta
If the Appraisal On the Indianapolis Area Home You Want to Buy Comes in Too Low, What Can You Do?
In the years since our lawmakers mandated that appraisals must be assigned by a third party rather than ordered by lenders, incorrect appraisals have become more common. According to the National Association of Realtors, agents report that as many as one in ten appraisals are incorrect.
This is due to the fact that appraisers are sent to neighborhoods and even cities they don't know. They're unfamiliar with things about location that affect value, and they haven't seen the homes they'll need to use for comparison.
This is perhaps why appraisers are a bit more open to being challenged than they were 20 years ago, when they considered that their word was law.
If you and your agent have done your homework and you know the home is worth what you've agreed to pay, you and/or the sellers, working through your agents, CAN challenge the appraisal.
Do remember to approach it softly. Saying "You're wrong" to anyone won't get you far. Instead, offer your assistance in one or both of these ways:
Supply the appraiser with different comps.
When the agents search for sold properties, they might find homes that are a better comparison, or they might find that another closing has taken place since the appraiser turned in his or her report.
If you know of homes that were sold by owner, give that information to your agent so he or she can get verification and supply it to the appraiser.
Supply the appraiser with better information on the comps that were used.
For instance, if the home you wish to buy has a newly remodeled kitchen and the comparables have kitchens that date to the 80's, the appraiser needs to know. He or she might even have unknowingly used a house with a badly damaged interior.
If all else fails…
If the appraiser refuses to budge, but you want the house and know the price is correct, spend the dollars to get a second opinion. Hire an appraiser who is familiar with the area. Make sure the new appraiser knows that part of his or her job is to document the correct value and dispute the previous appraisal – stating why it was incorrect.
